What Annuity Will £200k Buy?

If you’re a high earner, then investing in a pension annuity is an option that might be worth considering. It works by investing some of your existing pension pot into an annuity, which is then paid to you as a regular monthly income.

The amount you receive will depend on how much you invest and the rate that is offered by the annuity provider you invest with.

In this article, we’ll be looking at what kind of annuity £200k will buy.

We will cover the following topics:

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What annuity will £200k buy?

The exact amount you will get will depend on your age, the type of annuity you choose and the interest rate, among other factors. But if we’re talking ballpark figures, for £200,000, you can expect to receive an annuity worth around £11,192,28 per year. This would result in payments of approximately £933 per month.

Typically, this would be one of your pension income streams alongside others. But bear in mind, because everyone is different and providers can have varying terms and conditions, the example we’ve given is a very rough estimate.

For more comprehensive figure, arrange a free, no obligation chat with one of the expert advisors we work with. They can take all of your personal information into account and provide you with a bespoke annuity projection.

How can I get a better rate on a 200k annuity?

Rates are set by your provider but as they are liable to vary, you may not be getting the best deal unless you shop around with the help of an independent pensions advisor.

In fact, the Financial Conduct Authority (FCA) have calculated that 60% of people who purchase an annuity stay with the same provider and as a result, 80% of them are potentially missing out on getting a better rate.

If you have a 200k annuity that difference you’re losing out on could be worth thousands of pounds per year. To avoid that happening, continue to check rates regularly.

Secondly be aware of your own situation. If for example, you fall ill or develop a health condition you may become eligible for an ‘enhanced annuity’ which will automatically give you a bigger monthly pay out.

When can I start to receive the benefits of by 200k annuity?

You can start to receive an income from your £200,000 annuity as soon as you take it out. However if you leave it to mature for around six to 12 months, it’s likely that you’ll receive a better rate of payment. Do remember that normal retirement age criteria for withdrawing from a pension applies, so you can’t withdraw from your annuity until you reach the age of 55, unless you have special circumstances.

What factors may affect my 200k annuity?

If you’re wondering, what annuity will £200k buy, there are factors that will affect the rate you’re offered, which are explained here.

Your age

The older you are, the better the rate of annuity. If you have a 200k annuity and you want to take out money at the age of 55, you could receive £50,000 tax-free and receive around £6,400 per month. On the other hand, if you wait until you’re 70, you’ll get the same 25% tax-free sum of £50,000 but will receive £9,200 per month.

Type of annuity

Knowing you want to buy a £200,000 annuity is one thing, but you need to decide which type you want to take out. It’s best to speak with an expert before you decide as the type you choose will have implications.

For example if you opt for joint annuity it means you’ll receive less payments per month for your 200k annuity, but it means that when you pass away, your spouse will continue to receive money after, so it’s a case of less money, spread over a longer period of time.

You can also purchase an annuity by length. If you buy a lifetime annuity, you may get more from your 200k annuity, if you live for a long time, as you’ll receive payments for life, although the rate will be less per month. Whereas, in a fixed annuity you’ll receive more per month over less time.

Your annuity rules

Every provider offers different rate but if, for example, your agreement offers inflation protection, it may work out beneficial in the future. Initially you may receive a lower rate for your 200k annuity, but over time this can increase.

What annuity will £200k buy if I get an enhanced annuity?

As mentioned earlier, if you’re entitled to an enhanced annuity (for those with health problems), you’ll receive a higher rate per month as it’s assumed you’ll be receiving them over a shorter period of time.

Rates are dependent on what your condition is. For example if you’re 65 with no health problems your 200k annuity could give you around £8000 per month. If you’re diabetic this may increase to £9000 per month but if you’ve had a stroke it will be more.

How can you find out more about £200K annuities?

If you have a question about annuities or a £200,000 annuity, you can arrange a free, no-obligation chat, or give us a call on 0808 189 0463 and we’ll put you in touch with one of the experienced specialists that we work with who can give you advice tailored to your circumstances.

So sit back and let us do all the hard work in finding the pension advisor with the right expertise for your circumstances.

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

Tony has worked in a vastly diverse array of areas in the pensions industry for over 2 decades. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events. Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been "Hope for the best, but PLAN for the worst", and believes that the biggest impact that an adviser can have on a client's life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they WANT their retirement to be.

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